U.S. Prosecutors Demand 12-Year Sentence for Do-hyung in "Colossal" TerraUSD Fraud Case
Justice Department seeks over a decade behind bars for Terra founder—calling the stablecoin collapse one of the largest financial frauds in crypto history.
The Numbers Tell the Story
Federal prosecutors aren't mincing words. They've slapped the "colossal" label on the TerraUSD debacle and matched it with a demand for 12 years of prison time. That sentence request sends a clear message: regulators are done playing nice with algorithmic stablecoin experiments that vaporize $40 billion in market value.
A New Era of Enforcement
This isn't just about one failed project. The aggressive push for a lengthy sentence cuts straight to the heart of crypto's credibility problem. It bypasses the usual wrist-slaps and targets the architects of systemic risk—turning legal documents into a warning shot for any founder blurring the line between innovation and fraud.
Market Realities vs. Regulatory Hammers
While the industry preaches decentralization and code-as-law, the DoJ's filing reads like a traditional finance indictment. They're applying old-school fraud statutes to new-school finance—proving that when retail losses pile high enough, the hammer drops regardless of the technology involved. Another reminder that in finance, the only algorithm that truly matters is the one calculating prison sentences.
The takeaway? Build something that collapses and takes millions of investors down with it, and you might just get a decade-plus to reflect on your choices—proving that some crypto projects are better at generating court cases than returns.
Kwon offered 5 years, feds want 12
Do-hyung tried to cut his punishment short. In a separate filing last week, he said five years WOULD be enough. He had already pleaded guilty in August to both conspiracy and wire fraud, with a deal that capped the sentence at no more than 12 years.
That deal also forced him to hand over $19.3 million and some of his properties. The government made it clear they are not pursuing restitution, saying it would be too messy to figure out the exact losses for the millions of people who lost money.
His legal issues haven’t been limited to the U.S. After he was caught using a fake passport in Montenegro in 2023, authorities from South Korea and the U.S. fought over who would get him first.
He ended up being extradited to the U.S. in January, after spending nearly two years locked up in Montenegro over the passport charges.
Even with all that, U.S. officials say they’ll support transferring him to South Korea for the second half of his sentence, but only if he keeps his end of the plea deal and qualifies under an international inmate transfer program.
The case is landing at a strange moment for crypto enforcement. While Do-hyung’s sentence is being pushed hard by prosecutors, the broader crackdown seems to be losing steam.
Just this October, Donald Trump pardoned Changpeng Zhao, the Binance founder, who was convicted of running the world’s largest crypto exchange without proper anti-money-laundering controls.
The difference in how these two cases are being handled hasn’t gone unnoticed in the crypto world. While Zhao walked, Do-hyung might get locked up for over a decade if the government gets its way.
And with billions lost, no restitution planned, and no clear fix for the victims, the court’s decision next week is likely to set the tone for how hard the U.S. plans to come down on failed crypto founders.
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